Complete Guide to CSRD Compliance

Everything you need to know about the Corporate Sustainability Reporting Directive and how to prepare your organization for compliance.

What is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that requires companies to report on their environmental and social impacts. Key points: • Replaces the Non-Financial Reporting Directive (NFRD) • Applies to approximately 50,000 companies • Requires reporting according to European Sustainability Reporting Standards (ESRS) • Reports must be digitally tagged in XBRL format • Subject to limited assurance by an auditor

Who Must Comply?

CSRD applies to three groups of companies in phases: Phase 1 (FY 2024): Companies already subject to NFRD Phase 2 (FY 2025): Large companies meeting 2 of 3 criteria: - More than 250 employees - Net turnover > €50 million - Total assets > €25 million Phase 3 (FY 2026): Listed SMEs (with opt-out until 2028) Non-EU companies with EU revenue > €150 million may also be subject to CSRD.

ESRS Standards Overview

ESRS consists of 12 standards organized into three categories: Cross-Cutting Standards: • ESRS 1: General requirements • ESRS 2: General disclosures Environmental Standards: • E1: Climate change • E2: Pollution • E3: Water and marine resources • E4: Biodiversity and ecosystems • E5: Resource use and circular economy Social Standards: • S1: Own workforce • S2: Workers in value chain • S3: Affected communities • S4: Consumers and end-users Governance Standards: • G1: Business conduct

Double Materiality

CSRD introduces the concept of double materiality, requiring companies to assess: 1. Impact Materiality: How your company affects people and the environment 2. Financial Materiality: How sustainability matters affect your company's finances Both perspectives must be considered when determining what to report. Topics that are material from either perspective must be disclosed.

Implementation Steps

1. Assess applicability: Determine when CSRD applies to your organization 2. Conduct gap analysis: Compare current reporting against ESRS requirements 3. Perform double materiality assessment: Identify material topics 4. Establish data collection processes: Build systems to gather required information 5. Prepare report: Draft disclosures according to ESRS standards 6. Obtain assurance: Engage auditors for limited assurance 7. File report: Submit digitally tagged report in management report